Steemit Crypto Academy Contest / S7W3 - Understanding Crypto Trading
TRADING
Trading means buying and selling different things with each other. These things can be of any kind. Trade has been going on for a long time, and in olden times people used to exchange their goods with each other due to a lack of money; for example, one man would give flour to another and take sugar, etc. from him.
There are many types of trading that are available today, like crypto trading, stock trading, and many other types of trading. Many countries buy and sell different products to each other and make a lot of money from it. Trading not only gives us profit, but we may also face losses at some point. It depends on your trading ability.
I will now explain cryptocurrency trading. In the above paragraph, I explained about trading. So trading means "buying or selling," and crypto means digital assets or crypto coins. So crypto trading means buying or selling crypto assets. These digital assets can be the BTC coin, which is a very popular crypto coin, and many altcoins like ETH, SOL, and thousands of others.
Crypto trading is very risky, and it can make you profit or lose very quickly. If compared to other trades, it is the riskiest of all trades as it has a high chance of profit or loss. People who don't understand crypto trading lose a lot of money and feel bad about it, but it's not like that; you need knowledge for this type of trading.
Crypto trading has been banned in many countries because people say it is too harmful for us. If I talk about Pakistan, crypto trading is not fully legal in my country due to high pump and dump. Crypto trading has some types, like spot trading, margin trading, future trading, etc. But futures trading can be very risky for the inexperienced.
There are many platforms available on the internet that offer crypto trading. The biggest exchange for buying and selling crypto is Binance, where we can buy almost every major or good coin. Only those who do a proper fundamental and technical analysis of the digital asset before investing can be successful in crypto trading.
TRADING PRINCIPLES TO ALWAYS KEEP IN MIND AS A CRYPTO TRADER
There are actually some rules that everyone should know before investing in the crypto market. If we follow these principles, we can avoid losses and earn good profits.
- DYOR
One of these principles is "do your own research" (DYOR), which means do your own research before investing in the cryptocurrency market. This principle is very beneficial for all crypto traders. We can become successful crypto traders if we do our own research before investing in crypto. So don't follow any other trader if you want to avoid losses; just do your research.
- Diversify Your Portfolio
This is another good rule that we should know as crypto traders. Actually, some new traders put all their money in one coin, which can be harmful to us and lead to losses. So if we want to avoid big losses, then this principle is beneficial for us. Instead of investing in a single coin, invest your money in different good coins.
- Don't trade on emotion
Some new traders do not know much about crypto trading. So when the market starts to go up, they create FOMO in themselves; they think that we will miss the pump. On the other hand, when the market goes down, they sell their coins for fear of loss. So before investing in crypto, we should control our emotions if we want to avoid losses.
HOW I CAN BUILD MY OWN TRADING STRATEGY
For a good trading start, we should follow all the trading rules, as I do. For a successful trading strategy, I should do my own research on the coin I want to invest in. This research is done in the form of fundamental and technical analysis. This type of research gives us clear information about investments. I also focus on the historical data of the coin I want to invest in. Other things I do are: I never put all my money in one coin; I diversify my portfolio and invest my money in many coins. Control our emotions while trading crypto to develop a good crypto strategy.
FUNDAMENTAL ANALYSIS TO GENERATE YOUR OWN CRYPTO TRADING IDEAS
Fundamental analysis before investing in the crypto market is a very good thing if we want to avoid scams and make good decisions. Fundamental analysis gives us proper information about the owners of a crypto, its supply, its all-time highs and lows, its roadmap, its market cap, its adoption, and many other things that we want to know about a particular crypto.
To use fundamental analysis to generate good trading ideas, we need to know about the team of the crypto project, its total and circulating supply, various projects on its blockchain, its roadmap, and its followers on Twitter. We should know that the owners of the crypto project are improving it and keeping its audience updated. We should check the market dominance of this coin for better investigation.
For example, there are many projects in the crypto market that have very strong fundamentals, such as ADA Coin, because the team behind this coin is very diligent and shares every detail with its audience. Its market rank is also very good. If we want to invest in crypto and research it, the market rank of that crypto must be good. If a crypto is doing well and has good fundamentals, we can invest in it.
TECHNICAL ANALYSIS WHEN TRADING ON CRYPTO
Technical analysis is a very good tool for making decisions in the crypto market. With the help of technical analysis on crypto, we can make a good profit because it is really helpful for us. A good investor always conducts a technical and fundamental analysis of the crypto he wants to buy before investing.
Technical analysis can be done with the help of charts, and it is good for everyone. Every new trader must learn cryptographic charting if he wants to be successful. I use technical analysis while trading crypto, with the help of support and resistance lines and some indicators.
When I do my technical analysis on crypto, I use different indicators. because using a single indicator can sometimes give us wrong signals, which can cause us loss. I use many indicators like the moving average, MACD, RSI, parabolic SAR, and some other good indicators along with trendlines when trading crypto.
I made a good profit with the help of technical analysis, and it helps me a lot. But for better understanding, it is necessary to do fundamental analysis along with technical analysis. I also use Fibonacci tools in my technical analysis to take some profits because it is a very good tool. So this is my technical analysis method.
3 KEY CONCEPTS OF RISK MANAGEMENT
Now I will explain three key concepts of risk management that a new crypto trader must know before trading in the crypto market. So let's know about them one by one.
- Diversification
You can reduce your risk by diversifying your cryptocurrency portfolio. As I mentioned above, instead of investing in one cryptocurrency, investing money in different coins can protect us from big losses. So this is one of the key risk management concepts that a new crypto trader must know if he wants to avoid losses.
- Dollar Cost Averaging
Another key concept in risk management is DCA, or dollar cost averaging, which means dividing your investment into parts. If you use this strategy, you can minimise your risk of loss and maximise your profit. For example, if a person wants to invest $100 in crypto, it would be better to invest this amount in parts rather than all at once.
- Stop Loss
The 3rd and final key concept of risk management is stop loss. If you want to avoid a big loss, then you have to set a stop loss. A stop loss is the maximum loss you can bear. So a new entrant should set a stop loss to make a good trade and avoid losses. Sometimes stopping the bleeding helps us a lot. So losing some money is better than losing all the money.
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WRITER:
Great post @malikusman1, it is always important to have a strong understanding of trading principles and strategies before diving into any market, including the crypto market. Your explanation of "DYOR" and diversifying your portfolio are key points that all traders should keep in mind.
I also appreciate your emphasis on not trading based on emotions. It can be easy to get caught up in the excitement of a market trend, but it is important to make logical and informed decisions. By conducting thorough fundamental and technical analysis, as you mentioned, traders can make more informed decisions and potentially avoid scams.
One aspect of your post that I found particularly interesting was your mention of the different types of crypto trading, such as spot trading and margin trading. It is important for traders to understand the different options available and the associated risks. For example, margin trading can be riskier for inexperienced traders, as it involves borrowing money to trade with, and the potential for losses can be higher.
Furthermore, your mention of the importance of diversifying one's portfolio is key. Instead of putting all eggs in one basket, spreading investments among different coins or tokens can reduce the overall risk. This is a good way to protect one's portfolio from the volatility of the crypto market.
Another point you brought up was the fact that crypto trading is not fully legal in some countries. This is an important consideration for traders, as it can affect their ability to access certain platforms and make trades. It's also important to follow any regulations and laws in your country to avoid any legal issues.
In conclusion, your post provides valuable insights and information for traders looking to get involved in the crypto market. Keep in mind that crypto trading is a high-risk, high-reward activity and it is crucial to be well-informed and have a solid trading strategy before investing. Thanks for sharing your knowledge and experience.
Hi @fabiha,
Yes because with its help we can avoid great loss. Because DYOR is very important in crypto for both new and old traders. On the other hand, diversification is important to avoid losses.
Yes, technical and fundamental analysis is a very good thing in crypto trading. By fundamental analysis we can avoid scam and by technical analysis we can take some good positions.
Yes, margin and futures trading can be very risky for a new crypto trader. So a new trader should avoid this type of trade. He should only do spot trade in the initial days.
In fact, losing something is better than losing all the money. So we can be a successful trader and avoid from a big loss, if we spread your investment across different cryptos.
Yes, you also belong to Pakistan and you know that crypto is not legal in Pakistan. But I hope one day we will enjoy crypto trading in our country.
Yes, there is no doubt that crypto trading can be very risky, so invest in it only after proper fundamental and technical analysis. I also advise you to only invest in cryptos that you are ready to lose. Thank you very much for the great comment. I appreciate your work, keep up the good work.
Regards,
@malikusman1
Thanks for the detailed response @malikusman1, I appreciate your insights and valuable advice. It's great to see that we share similar views on the importance of DYOR, diversifying, and conducting fundamental and technical analysis before investing in the crypto market. It's also important to be aware of the different types of trading and the associated risks, especially for new traders. I agree that it is important to follow regulations and laws in our country to avoid any legal issues. Keep up the good work and keep sharing your knowledge and experience.
Regards,
@fabiha
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You have written so well my friend with regards to the topic under consideration. Trading as you have explain involves buying and selling of different things. In the case of crypto trading we know that it has to do with buying and selling of digital assets. You have also explain your understanding of technical and fundamental analysis and have stated the 3 concepts which should be taken into consideration by traders in other to be successful. Diversification and setting SL/TP are major parts that helps crypto traders to minimize loss and maximize profit. I wish you success in this contest my friend.
Thank you so much for your positive feedback. I hope this post is informative for new comers who want to learn crypto trading.
Greetings brother @malikusman1
You have shared in depth article on what crypto trading actually is. You have well explained the principles including DYOR, Diversification and never ever trade on emotions. I agree with you and want to add emotions can lead us to trade loss which I personally experienced many times but now I have much control on my emotions.
Currently I am not trading any coin and 99% of the portfolio is in stable coin but in past, I used mostly RSI indicator which I think gives much good signals. But I will also learn other indicators before trading again.
The 3 concepts of risk management are key point for every trader including new and experienced.
In last, you have shared quality content brother and I wish you success for the contest as you have put all of your efforts in creating the content :)
Hi bro, yes these are some things that everyone must know before investing in crypto market. Because we all know how dangerous the crypto market is. I suggest that you don't use only one indicator in trading, you can use more than one for better results and profitable trading. Thank you very much for the comment.
Yes I will surely use more than 1 indicator now. Thank you :)
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Greetings, my friend @malikusman1, I appreciate the effort you put into your post on understanding crypto trading. Your post clearly explains the basics of trading and how it applies to the crypto market.
One important point you made was the importance of conducting your own research (DYOR) before investing in the crypto market. This principle can be very beneficial for traders as it can help them avoid losses and make informed decisions. Additionally, diversifying your portfolio and controlling emotions while trading are also important strategies to keep in mind.
Another key point you highlighted was the importance of fundamental analysis in generating your own trading ideas. By thoroughly researching a coin's ownership, supply, and historical data, traders can make well-informed decisions and avoid scams.
Overall, your post provides valuable information for those looking to get into crypto trading. Keep up the good work and continue to share your knowledge and experience with the community.
Hello bhai jan,
Mere kam ki tareef karny ka bht bht shukria, me dekh raha hun k ap bht acha kam kar rahy hain. Apny meri post ko detail se para or apna qemiti tabsara kia. Me apko mashwara dunga k acha kam jarri rakho. Kamyabi apki hogi.
Shukria bhaai jan, aap ki tareef se mujhe khushi ho rahi hai. Main apna kaam behtareen tareeqa se karne ki koshish karta rahunga. Aap ka mashwara aur dua mujhe kamyabi dilaayega. Allah ap ko kamyabbiiii ata kary.
Ameen..
TEAM 1
Congratulations! This post has been upvoted through steemcurator04. We support quality posts , good comments anywhere and any tags.Thank you @suboohi.
You have written the whole blog in a very good way as you discussed the concept of trading. You have said it right that crypto trading is risky but can be profitable with the right knowledge and understanding.
Indeed, crypto can makes us rich if we do it with proper knowledge. Thank you so much for the comment and welcome back.
Indeed. Thank you for noticing my return
Assalamualaikum piyary bhai.
Janab ap ny is post ko explain krny me koi kasar nahi chodi or me apki details ka bohat ziada fan hun. Apny crypto trading to bohat achy andaz me biyan kia ha k crypto trading ka mtlb ha crypto market me mojood fluctuations ka faida utahana, bilkul durust.
Technical analysis me ap aik mahir ustad hain or me b ap sy inshallah technical analysis seekhna chahun ga. Different technical analysis tools ko apply krny k bad hum is sy anny waly trends ki prediction kr skty hain.
Bohat khooob boss, keep it up. Good luck for the contest.
Wa Alaikum Asslam bhai jan,
Hahah boss asy na karo me apka fan hun, or ap muje se kafi zyada ilam rakhty ho. Me sagu apsy trading sikhna chata hun. Apky achy comment ka or meri tareef karny ka shukria.
You have presented a very interesting and educative article with us this week friend. Through your article, I have got to understand that crypto currency trading basically involves the exchange of digital assets between exchange (either centralized or decentralized exchange).
The DYOR is equally a very important and aspect to pay attention to when trading cryptocurrency, as it would make a trader to make more informed decisions and successful trades.
Thanks for sharing such an educative and interesting content for us boss, I would appreciate if you equally engage in mine.
Indeed, DOYR is a very good strategy and every trader should do it. Many thanks for comment, glad to know this article gives you knowledge.